Key benchmark indices edged higher in choppy session after global credit rating agency Standard & Poor's (S&P) revised upwards its outlook on India's sovereign credit rating to stable from negative. The market breadth indicating the overall health of the market turned positive from negative in late trade. The barometer index, the S&P BSE Sensex, was provisionally up 170.92 points or 0.65% at 26,639.28. A recovery in European stocks also boosted sentiment. Bank stocks reversed intraday losses. Metal stocks rose.
Volatility was the order of the day as key indices alternately swung between positive and negative zone in intraday trade. When the news of the S&P upgrade hit the market in mid-afternoon trade, the Sensex was languishing in red. It reversed those losses soon after the news.
In overseas markets, European stocks reversed intraday losses as investors awaited data on US gross domestic product to gauge the outlook for interest rates in the world's largest economy. Asian stocks dropped after steep losses for US stocks overnight. US stocks fell sharply yesterday, 25 September 2014, on a report that Russian lawmakers are drafting legislation that would allow the government to seize foreign assets in response to sanctions by US and the European Union imposed on account of Russia's aggression in Ukraine.
In the foreign exchange market, the rupee edged higher against the dollar after global credit rating agency Standard & Poor's (S&P) revised upwards its outlook on India's sovereign credit rating to stable from negative.
Brent crude oil prices edged lower as hefty supplies capped price gains and outweighed concerns that rising tensions in the Middle East could disrupt supply.
S&P said that the stable outlook for the next 24 months reflects the rating agency's view that the new government has both the willingness and capacity to implement reforms necessary to restore some of India's lost growth potential, consolidate its fiscal accounts and permit the Reserve Bank of India to carry out effective monetary policy. The government's actions will likely add momentum to the incipient cyclical upswing evident in the economy, S&P said. The rating agency said it expects improved fiscal performance in the medium term primarily from revenue-side improvements brought about by the planned introduction of a national goods and services tax (GST) and administrative efforts to expand the tax base. "We project net general government debt to decline to below 60% of GDP by the year ending March 2018, and with it, general government interest rate expense to just under 20% of revenues", S&P said. India's external position is a key credit strength, S&P said.
The rating agency said it may raise India's rating if the economy reverts to a real per capita GDP trend growth of 5.5% per year and fiscal, external, or inflation metrics improve. S&P also simultaneously warned that it may lower the rating if the government's structural reform agenda stalls.
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As per provisional figures, the S&P BSE Sensex was up 170.92 points or 0.65% at 26,639.28. The index jumped 252.67 points at the day's high of 26,721.03 in late trade. The index lost 247.87 points at the day's low of 26,220.49 in afternoon trade, its lowest level since 18 August 2014.
The CNX Nifty was up 57 points or 0.72% at 7,968.85, as per provisional figures. The index hit a high of 7,993.30 in intraday trade. The index hit a low of 7,841.80 in intraday trade, its lowest level since 18 August 2014.
The total turnover on BSE amounted to Rs 4428 crore, higher than Rs 3624.11 crore on Thursday, 25 September 2014.
The market breadth indicating the overall health of the market turned positive from negative in late trade. On BSE, 1,541 shares rose and 1,417 shares fell. A total of 83 shares were unchanged. Earlier, the breadth had turned negative from positive in mid-morning trade.
The BSE Mid-Cap index was up 81.39 points or 0.87% at 9,432.11. The BSE Small-Cap index was up 70.08 points or 0.67% at 10,514.87. Both these indices underperformed the Sensex.
Metal stocks rose on renewed buying. Sesa Sterlite (up 0.49%), JSW Steel (up 3.33%), NMDC (up 4.71%), Hindustan Zinc (up 2.03%), Bhushan Steel (up 5%), Tata Steel (up 3.25%), Steel Authority of India (Sail) (up 6.15%), National Aluminum Company (up 1.75%) and Hindustan Copper (up 0.82%) gained.
Jindal Steel & Power (JSPL) jumped 5.02%. The company after trading hours on Thursday, 25 September 2014, said that the management is in the process of evaluating the impact of the Supreme Court's decision. The stock had been hit adversely in prior two sessions by the Supreme Court's decision on Wednesday, 24 September 2014, to cancel most coal blocks allocated since 1993 as the company has operating coal blocks which stand cancelled.
Hindalco Industries jumped 5.65% after the company after market hours on Thursday, 25 September 2014, issued a clarification with regard to the Supreme Court cancelling coal block allocations that the only incremental impact because of the cancelation of coal blocks would be on the cost of production at Hirakud smelter starting April 2015, which is not expected to be significant. The company said that at a suggested levy of Rs 295 per tonne on coal, the total one time impact on the company would be around Rs 500 crore. In any case, the company was not expecting the captive coal immediately and it has plans to operate on purchased coal.
Bank stocks reversed intraday losses. Union Bank of India (up 5.82%), Bank of India (up 2.54%), Bank of Baroda (up 1.71%), Syndicate Bank (up 6.33%), Dena Bank (up 3.15%), Indian Bank (up 1.13%), Canara Bank (up 2.54%), Indian Overseas Bank (up 5.71%), Andhra Bank (up 7.08%), Punjab National Bank (up 4.15%) and Oriental Bank of Commerce (up 4.25%) gained.
Among private sector banks, ICICI Bank (up 0.96%), IndusInd Bank (up 2.34%), Yes Bank (up 4.92%), Federal Bank (up 2.37%), HDFC Bank (up 2.31%) and Axis Bank (up 2.95%), gained. Kotak Mahindra Bank dropped 0.45%.
Bank stocks had tumbled recently amid concerns of bad loans due to their exposure to coal mines after the Supreme Court's decision on Wednesday, 24 September 2014, cancelling most coal block allocations since 1993.
The Supreme Court in its verdict Wednesday, 24 September 2014, cancelled the allocation of 214 out of 218 coal blocks it had already declared illegal due to irregularities in the allocation of the blocks. Of these, licenses for 172 coal blocks which weren't in production stand canceled immediately, while licenses for 42 blocks which were producing coal or were close to starting production would stand canceled after six months, the court said. The six months' time has been allowed to ensure coal supplies don't get affected until the government comes out with a fresh policy for auctioning the canceled coal blocks. Coal India will take over operations of the cancelled coal blocks until they are re-auctioned.
The court also slapped a penalty of Rs 295 per tonne on operating coal blocks for coal already extracted from the blocks.
State Bank of India (SBI) rose 2.71% to Rs 2,442.90. The stock hit high of Rs 2,455.20 and low of Rs 2,348 in intraday trade. Arundhati Bhattacharya, Chairman of the bank was quoted by the media as saying that she does not believe that the entire exposure to companies that will be impacted by the recent Supreme Court judgement quashing 214 coal blocks will be written off. The bank reportedly has more than Rs 4000 crore exposure to companies that will be impacted by the recent Supreme Court judgement quashing 214 coal blocks. On upcoming Reserve Bank policy on 30 September 2014, she is expecting a status quo, with maybe some tweaking on the CRR side, report said.
L&T gained 1.88% L&T Infotech, a wholly owned subsidiary of L&T announced during market hours a partnership with Solix Technologies, a leading provider of enterprise data management (EDM) solutions, to offer customers a comprehensive information lifecycle (ILM) solution to manage both structured and unstructured data.
In the foreign exchange market, the rupee edged higher against the dollar after global credit rating agency Standard & Poor's (S&P) revised upwards its outlook on India's sovereign credit rating to stable from negative. The partially convertible rupee was hovering at 61.11, compared with its close of 61.34 during the previous trading session.
Brent crude oil prices edged lower as hefty supplies capped price gains and outweighed concerns that rising tensions in the Middle East could disrupt supply. Brent for November settlement was off 21 cents at $96.79 a barrel. The contract had risen 5 cents a barrel or 0.05% to settle at $97 a barrel yesterday, 25 September 2014.
Prime Minister Narendra Modi will reach the United States today, 26 September 2014, for a five-day official visit. The Indian Prime Minister will meet US President Barack Obama at the White House on 29-30 September 2014. The two leaders will discuss a range of issues of mutual interest in order to expand and deepen the US-India strategic partnership. They will discuss ways to accelerate economic growth, bolster security cooperation, and collaborate in activities that bring long-term benefits to both countries and the world.
The Reserve Bank of India (RBI) undertakes fourth bi-monthly monetary policy review on 30 September 2014. The central bank's policy stance after the review could provide cues on the direction of interest rates in the coming months. The central bank is targeting consumer price inflation at 8% by end January 2015 and 6% by end January 2016.
European stocks reversed intraday losses today, 26 September 2014, as investors awaited data on US gross domestic product to gauge the outlook for interest rates in the world's largest economy. Key indices in France, Germany and UK were up 0.02% to 0.72%.
A sentiment survey released today, 26 September 2014, showed that German consumer confidence is expected to deteriorate for a second consecutive month in October. The monthly survey of GfK market research group showed consumer confidence falling to 8.3 points for October from an unrevised 8.6 points in September. Nonetheless, confidence remains "at a good level," GfK said. Germany is Europe's biggest economy.
French consumer confidence remained stable as expected in September, survey data from the statistical office Insee showed today, 26 September 2014. The consumer confidence remained at 86 for the third consecutive month in September.
Asian stocks dropped today, 26 September 2014, after steep losses for US stocks overnight. Key benchmark indices in Indonesia, Japan, South Korea, Hong Kong, and Taiwan were off 0.12% to 1.32%. Key benchmark indices in China and Singapore rose 0.04% to 0.11%.
Japan's annual core consumer inflation eased in August, in another sign that the Bank of Japan could be forced into additional easing steps to meet its 2% price goal sometime next fiscal year.
Trading in US index futures indicated that Dow could gain 36 points at the opening bell today, 26 September 2014. US stocks fell sharply on Thursday, 25 September 2014, on a report that Russian lawmakers are drafting legislation that would allow the government to seize foreign assets in response to sanctions by US and the European Union imposed on account of Russia's aggression in Ukraine.
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